Time value of money multiple choice questions and answers
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Given the following profits from the investment what is its net present value assuming a discount rate of 10%? How much will you have after 5 years? It grows at the rate of 4%, 5% and 8% during the first year, second year and third year respectively. Holding all other variables constant, an increase in the interest rate will cause a. The interest for two years will be: a Rs. Assume that the savings account pays 7% and it is compounded quarterly. Time value of money can also answer such questions as what one's investment will be worth at a certain point of time in the future, assuming a certain interest rate.

Stocks valuation and stock market equilibrium quiz has 85 multiple choice questions. Given these assumptions, what is this employee benefit worth to you today? When current interest rates are different from expected future rates. Copyright Â© 1995-2010 Pearson Education. In 20 years at 10 percent? If the compound interest on a certain sum of money for 2 Â½ years at 5% per annum be Rs. The loan agreement calls for 3 equal payments, to be paid at the end of each of the next 3 years. In a typical loan amortization schedule, the dollar amount of interest paid each period. In 40 years at 12 percent? Authenticity We write all our papers from scratch and never plagiarize at all.

At the end of the 41st year you will begin receiving a perpetuity from the account. A sum of money doubles itself at compound interest in 15 years. Time value of money can also be used to compute such useful information as car, mortgage and other loan payments. The discount factor is the reciprocal of the compound factor. The capacity of the machine will be 6 million items for the first two years but this will fall to 5 million items in years 3 and 4. The following Submit Answers for Grading button is provided in its place and will clear your answers: The Clear Answers and Start Over feature requires scripting to function.

The overview provides an introduction to the principles at work when money grows in value over time. What is the payback period for the machine? As a result, when one deposits money in a bank account, one demands and earns interest. Your browser either does not support scripting or you have turned scripting off. At a 9% interest rate, what is the present value of these cash returns? X wishes to repay the amount in five installments. If Ali wishes to determine the amount of the annuity to be withdrawn each year, he should use the following two tables in this order: A. The account will then be left to compound for an additional 20 years.

Future value has a tendency to be deep;. Given the following information, how much should the annual loan payments be? Its basic premise is that money gains value over time. In 25 years at 14 percent compounded semiannually? Note: Your browser must support JavaScript in order to use this quiz. Learning Objective: 09-04 Not only can future value and present value be computed; but other factors such as yield rate of return can be determined as well. The money will be used for his son's education 15 years from now. Learning Objective: 09-02 The future value is based on the number of periods over which the funds are to be compounded at a given interest rate.

Time value of money supports the comparison of cash flows recorded at different time period by a Discounting all cash flows to a common point of time b Compounding all cash flows to a common point of time c Using either a or b d None of the above. A principal of Â£800 is invested for five years at 4. The straight line method of calculating depreciation: 10. You are, therefore, guaranteed of a well-researched paper with the right content and in the correct structure. The difference in simple interest at 13% and 12% p.

The concept of time value of money is important to financial decision making because A. Financial options and applications in corporate finance quiz has 68 multiple choice questions. Which of the following concepts is incorrect? Find the compound interest on Rs 6400 for 2 years, compounded annually at 7. To fully understand time value of money one must first understand a few terms. After making the payment, how much did they still owe? To find the present value of this contract, which table or tables should you use? An annuity consists of an unbroken series of cash flows of equal dollar amount occurring over more than one period. Under what conditions must a distinction be made between money to be received today and money to be received in the future? He can buy the lot today and expects the.

Five years with a simple annual interest rate of 10 percent B. Professionalism Professional writers in the various fields who have a wealth of experience in academia write all your papers. Find the compound interest on Rs. The tax rates are as shown. Or you may need to convert to. The time value of money is a fundamental financial principle. Payments include both principal and interest.

In 25 years at 14 percent? All of the above 6. An annuity due has payments at the beginning of each year. Marcia Stubern is planning for her golden years. Alternative b is preferred because it compounds your interest more frequently. If you could earn 12 percent annually, would you still choose the same alternative.